While the press is peddling fluffy stories about Musk’s salary and nude Tesla drivers, a brief comment from Dieter Zetsche at the Beijing Auto Show received almost no initial coverage and even less follow-up discussion. The Daimler chief executive said he won’t invest in the Gigafactory because Li-ion has ripened and could fall from the tree. “A question is, when do you realistically see the next-generation batteries,” he was quoted in the WSJ. “Lithium air, lithium sulfur? No one has the answer to the next generation.” Not many words there, but they carry the scary implication that Tesla is going whole-hog on lithium ion and is unprepared to assimilate new tech.
Before we scoff at Zetsche, let’s remember that Daimler owns a little over four percent of Tesla (the stake was 10 percent at one point) and contracts with Tesla. Most importantly, Zetsche rescued Tesla from the abyss with an 11th-hour contract even while Daimler itself was teetering. The Model S likely would not exist without Dr. Z., so scoffing at him is like scoffing at Darth Vader. It’s bad for your windpipe. If we can’t scoff, we can at least ask follow-up questions — as politely as possible, while watching carefully for any pinchy hand gestures from Zetsche.
Dear Dr. Z:
1. Did you REALLY talk to Tesla and come away thinking the company could be blindsided by a battery breakthrough? That doesn’t sound like the Tesla we know. Please tell us you’re not trying to water the seeds of doubt planted by your Benz man, Steve Cannon, at the New York Auto Show just a few days before your comment at the Beijing show. You do, of course, directly compete with Tesla. That includes the S-Class, outsold by Tesla last year, and the Denza EV you just unveiled in China, where Elon Skywalker is looking for traction.
2. You’re not REALLY miffed about Tesla’s proprietary charging stations, right?
3. If Li-ion is so close to passe that the Gigafactory deserves zero Daimler dollars, why did Daimler spend a lot more than zero dollars on the same technology earlier this month?
4. Let’s assume you’re right about battery tech nearing a breakthrough and Tesla missing it. Have you failed to notice that cars needn’t have the very latest technology in order to sell well? Look at the Prius. It packs NiMH for cripes sake. Most don’t plug in at all, and the few that do pack Li-ion can barely break 10 miles per charge. So the Prius is behind the times, yet it still has its segment padlocked. Honda just euthanized the Insight and blamed the Prius. So even if — and this is “if” is plenty preposterous — Tesla falls behind the latest battery tech, or is blindsided by sudden feasibility of fuel cells, the Prius precedent suggests the Model E could outshine rivals for more than a decade using strictly “old school” Li-ion motivation.
5. These “breakthrough” batteries — Mg-ion, Li-air, Li-S — they’re still firmly the labcoat stage and well over a decade away from automotive use, given the shortcomings of each, including degradation, instability and safety concerns. True? And even if they creep into automobiledom eventually, broad adoption will take another several years. True? Yet we all have to eat NOW, not 2030. Besides, Tesla has a knack for milking current technology in novel ways. True? That’s why you’re an investor.
Forgive us for looking askance at a man of your caliber and putting you in the crossfire, but along every business journey, even the best commander can find his compass out of alignment. Hey, if it turns out you were right about the Gigafactory’s shelf life, well then we Tesla longs will have to call you daddy.